Govt complacency leaves RB no room to cut

Posted by Grant Robertson on April 28, 2016

The Government has put the economy in a holding pattern, leaving the Reserve Bank Governor with little room to manoeuvre as he tries to balance a rampant housing market with non-existent inflation, says Labour’s Finance spokesperson Grant Robertson.

“Graeme Wheeler has made it clear he has concerns over the international economy, increasing house prices in Auckland and other regions, and low milk prices. But with no action from the Government on any of these issues the Reserve Bank has few options but to stick with the status quo.

“Bill English’s complacency has put the economy in a holding pattern. Inflation is non-existent, the exchange rate is stubbornly high and growth per person has been described by economists as ‘sluggish’.

“On the other hand house prices are skyrocketing again and the Governor has warned the housing boom is spreading from Auckland to other regions. Unaffordable housing will be a blow to regions trying to encourage business and workers to move there.

“Mr Wheeler can’t do it all on his own. The Government needs to take action on multiple fronts – that will make it easier for the Reserve Bank to do its job.

“The upcoming Budget is the time for National to drop its increasingly arrogant belief that it has all the answers. It is genuinely becoming out of touch with the worries of middle New Zealand.

“There must be action to diversify the economy away from reliance on dairy and substantive policies to rein in the housing market.

“Bill English must ensure new industries and businesses are encouraged to flourish and existing ones to add value, supported by more and immediate infrastructure investment.

“The Government needs to be a partner in order to give all New Zealanders the opportunity to get ahead. Graeme Wheeler can’t be left to run the economy by himself,” says Grant Robertson.